Motor industry becomes a recessionista

JUST a cursory reading of the monthly National Association of Automobile Manufacturers of SA (Naamsa) new-car sales figures tells the story most clearly. It is the cheap stuff that we’re buying in great numbers.

That means South Africans are buying the Volkswagen Polo Vivo, a retreaded, unique-to-South Africa, previous-generation VW Polo. We are buying the India-built Ford Figo, a last-generation Fiesta. Consider, too, the huge success of the Toyota Etios, also built in India; and the Renault Sandero, a rebadged Dacia built in Pretoria.

They are all honest, frill-free, tough, ordinary cars with five manual forward gears, a couple of airbags and, perhaps, an air-conditioner. Luxury they are not, but, crucially, they are decent personal transport for the burgeoning lower middle classes in developing countries. This lesson has not gone unlearnt in a part of the world reacquainting itself with the prospect of living with less — Europe.

Car sales on the continent are a bloodbath. Factories are closing, and there is talk of one of the major European car makers not surviving the crisis at all. And so, while serving demand in Europe for cheap cars, car makers are also looking to soak up the increasingly lucrative markets for cheap, solid cars in developing markets such as India, Russia, Brazil — and even South Africa.

Renault, therefore, is in a far better shape than some, and that is because in 1999 the French car maker bought the all-but-defunct Dacia, a Romanian operation. Today, the brand’s two products — the Sandero (rebadged as a Renault in some markets, including SA) and a tough, no-frills SUV known as the Duster — make up 17% of Renault’s volume in Europe.

The Dacia brand is, according to reports, the fifth-most popular brand in France in cars bought by individuals. It is no surprise that Renault’s chief operating officer, Carlos Tavares, recently reportedly described Dacia as a "cash cow" — all at € 7,900 for a brand-new Sandero.

And in South Africa, and other developing countries, the Sandero is extremely popular — a hit because of its cheap price, decent five-door size, tried-and-tested last-generation technology motor and drive-train, and suspension designed for the rough and tumble of poor roads.

Dacia’s success has not gone unnoticed. Nissan recently announced that from next year it would reprise the long-dead Datsun brand, and sell a range of six entry-level cars in developing markets — specifically Russia, India, Indonesia and China — wearing the badge last seen on a new car in 1981.

However, according to Nissan SA spokeswoman Veralda Schmidt, there are "no plans yet" for the introduction of the Datsun brand in South Africa.

This is possibly because of the Renault-Nissan global alliance — it is possible that unless the Datsun products are significantly cheaper than the Dacia products, the group will look to protect its investment in the Renault-Dacia factory in Rosslyn, Pretoria, where the Sandero is built, by not introducing a competitor for the Sandero in the local market.

Most interestingly, however, a spokesman at German giant Volkswagen recently said the firm had been developing a sub-brand of its own. Der Spiegel quoted Eric Febler as saying that the firm had been "considering a sub-brand for some time". He hurriedly added that "nothing has been decided".

This seems unlikely. Volkswagen AG, which owns Volkswagen, Skoda, SEAT, Audi, Bugatti, Bentley and Lamborghini, desperately needs a car in the €7,000-€8,000 range to sell in depressed Europe and developing markets, and it simply does not have such a car.

Volkswagen have been extremely quiet about the matter ever since Mr Febler’s seemingly unguarded comments, with a local spokesman unwilling to speak "about a group matter".

But it seems likely that a super-cheap Volkswagen is in development for sale in 2015 – the question remains whether it will be badged Volkswagen, or perhaps Skoda or SEAT.

Given that Volkswagen portrays itself as "Das Auto", it would seem likely that such a car would have to be a VW, and yet given how lacking the car would need to be in luxury and some safety kit, equally, surely it could never be a Volkswagen.

Only time will tell — it’s a tough call for the company.

However, it probably doesn’t matter here in South Africa. It is unlikely that Volkswagen will launch the car here — the company will, just like Renault/Nissan, likely want to protect its investment at the Polo Vivo factory in Uitenhage.

As a result, while there’s going to be a sub-brand party in the Bric nations, the Renault-badged Sandero aside, and the potential for the launch of the Duster here, we in South Africa may well have to do without Datsuns, Dacias and the like.

JUST a cursory reading of the monthly National Association of Automobile Manufacturers of SA (Naamsa) new-car sales figures tells the story most clearly. It is the cheap stuff that we’re buying in great numbers.

That means South Africans are buying the Volkswagen Polo Vivo, a retreaded, unique-to-South Africa, previous-generation VW Polo. We are buying the India-built Ford Figo, a last-generation Fiesta. Consider, too, the huge success of the Toyota Etios, also built in India; and the Renault Sandero, a rebadged Dacia built in Pretoria.

They are all honest, frill-free, tough, ordinary cars with five manual forward gears, a couple of airbags and, perhaps, an air-conditioner. Luxury they are not, but, crucially, they are decent personal transport for the burgeoning lower middle classes in developing countries. This lesson has not gone unlearnt in a part of the world reacquainting itself with the prospect of living with less — Europe.

Car sales on the continent are a bloodbath. Factories are closing, and there is talk of one of the major European car makers not surviving the crisis at all. And so, while serving demand in Europe for cheap cars, car makers are also looking to soak up the increasingly lucrative markets for cheap, solid cars in developing markets such as India, Russia, Brazil — and even South Africa.

Renault, therefore, is in a far better shape than some, and that is because in 1999 the French car maker bought the all-but-defunct Dacia, a Romanian operation. Today, the brand’s two products — the Sandero (rebadged as a Renault in some markets, including SA) and a tough, no-frills SUV known as the Duster — make up 17% of Renault’s volume in Europe.

The Dacia brand is, according to reports, the fifth-most popular brand in France in cars bought by individuals. It is no surprise that Renault’s chief operating officer, Carlos Tavares, recently reportedly described Dacia as a "cash cow" — all at € 7,900 for a brand-new Sandero.

And in South Africa, and other developing countries, the Sandero is extremely popular — a hit because of its cheap price, decent five-door size, tried-and-tested last-generation technology motor and drive-train, and suspension designed for the rough and tumble of poor roads.

Dacia’s success has not gone unnoticed. Nissan recently announced that from next year it would reprise the long-dead Datsun brand, and sell a range of six entry-level cars in developing markets — specifically Russia, India, Indonesia and China — wearing the badge last seen on a new car in 1981.

However, according to Nissan SA spokeswoman Veralda Schmidt, there are "no plans yet" for the introduction of the Datsun brand in South Africa.

This is possibly because of the Renault-Nissan global alliance — it is possible that unless the Datsun products are significantly cheaper than the Dacia products, the group will look to protect its investment in the Renault-Dacia factory in Rosslyn, Pretoria, where the Sandero is built, by not introducing a competitor for the Sandero in the local market.

Most interestingly, however, a spokesman at German giant Volkswagen recently said the firm had been developing a sub-brand of its own. Der Spiegel quoted Eric Febler as saying that the firm had been "considering a sub-brand for some time". He hurriedly added that "nothing has been decided".

This seems unlikely. Volkswagen AG, which owns Volkswagen, Skoda, SEAT, Audi, Bugatti, Bentley and Lamborghini, desperately needs a car in the €7,000-€8,000 range to sell in depressed Europe and developing markets, and it simply does not have such a car.

Volkswagen have been extremely quiet about the matter ever since Mr Febler’s seemingly unguarded comments, with a local spokesman unwilling to speak "about a group matter".

But it seems likely that a super-cheap Volkswagen is in development for sale in 2015 – the question remains whether it will be badged Volkswagen, or perhaps Skoda or SEAT.

Given that Volkswagen portrays itself as "Das Auto", it would seem likely that such a car would have to be a VW, and yet given how lacking the car would need to be in luxury and some safety kit, equally, surely it could never be a Volkswagen.

Only time will tell — it’s a tough call for the company.

However, it probably doesn’t matter here in South Africa. It is unlikely that Volkswagen will launch the car here — the company will, just like Renault/Nissan, likely want to protect its investment at the Polo Vivo factory in Uitenhage.

As a result, while there’s going to be a sub-brand party in the Bric nations, the Renault-badged Sandero aside, and the potential for the launch of the Duster here, we in South Africa may well have to do without Datsuns, Dacias and the like.

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